For most New York buyers, closing day is supposed to be a formality: sign the papers, hand over the checks, and walk out with the keys. In practice, it is often the moment buyers learn things they wish they had understood weeks earlier.
Alexander Paykin, Esq., founder of Paykin Law, says most of those surprises should never reach the closing table. When they do, it is usually because nobody explained the numbers or the timing early enough. Here is what catches buyers off guard most often, and how to avoid it.
Your Loan Check Will Be Smaller Than Your Loan
The most common surprise is the gap between the mortgage amount and the money the lender actually brings to closing. In the days before closing, the buyer’s attorney gets the lender’s figures from the bank attorney, including what is known as the net. That is the real dollar amount the lender will put toward the purchase price.
“Most people think if you get a mortgage for 100,000, you get a check for 100,000. You don’t,” Paykin said. Before releasing the funds, the bank deducts processing fees, partial-month interest, its own attorney’s fees, and a range of other costs. The check that arrives is noticeably smaller than the loan, and the buyer has to cover the difference.
Paykin says it is the attorney’s job to explain this early, so the buyer is not scrambling for extra funds at the last minute.
The Numbers Should Be Reviewed Before Closing Day
Closing adjustments also catch buyers off guard. Paykin’s point is that none of this should be new information at the table. The settlement sheet should be prepared a few days before closing so the attorney can walk the client through every line in advance.
The same goes for title problems. Buyers sometimes worry that a lien will appear at the last moment. Paykin says that rarely happens, because the title company runs what is called a continuation search right before closing to catch anything new.
The Final Walkthrough Problem
What surprises buyers most, according to Paykin, is how little leverage they have at the closing itself. In theory, if the final walkthrough turns up damage that was not there when the contract was signed, the seller either gives a credit or makes the repair.
In reality, if the walkthrough happens the morning of closing or the day before, the timing works against the buyer. By then the bank attorney is in the room, the checks are cut, and the documents are prepared. If the buyer raises walkthrough issues, the seller will often refuse a credit and offer to adjourn the closing to make repairs instead.
That is where the math turns. Adjourning can mean an expired rate lock and extra fees from the lender. Paykin described buyers discovering that fixing $1,000 worth of damage would cost them $3,000 in added costs to push the closing back. At that point, most buyers take the property as is.
Schedule The Walkthrough Early
Paykin’s advice is simple: do the walkthrough a few days in advance, ideally at least a week before closing. That gives the buyer room to raise problems, threaten to adjourn, or actually adjourn before the costs pile up.
Rate locks make this more important. If a buyer locks a rate early and it is close to expiring, they are under heavy pressure to close no matter what, and any delay to let the seller fix something can be expensive.
Buyers should still do a quick walkthrough right before closing. That last check confirms nothing has changed since the earlier visit. But the real inspection should happen early enough that the buyer still has options.
Buyers who want these numbers and deadlines reviewed before they sign anything can schedule a new matter consultation with the firm.
Alexander Paykin, Esq. is the founder of Paykin Law, a New York real estate and commercial litigation firm based at 45 Rockefeller Plaza in Manhattan. The firm represents clients in real estate transactions, real estate and commercial litigation, foreclosure defense, landlord-tenant matters, and co-op and condo issues across New York City, Long Island, and Westchester.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.